According to Keynes, business cycles are due to variation in the rate of investment caused by fluctuations, in the - (1) Marginal efficiency of capital (2) Marginal propensity to save (3) Marginal propensity to consumption (4) Marginal efficiency to investment

According to Keynes, business cycles are due to variation in the rate of investment caused by fluctuations, in the - (1) Marginal efficiency of capital (2) Marginal propensity to save (3) Marginal propensity to consumption (4) Marginal efficiency to investment
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(1) Marginal efficiency of capital Explanation: According to Keynes' General Theory of Employment, Interest, and Money,' business cycles are caused by variations in the rate of investment which are caused by fluctuations in the marginal efficiency of capital. Marginal efficiency of capital means the expected profits from new investments.
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According to Keynes, business cycles are due to variation in the rate of investment caused by fluctuations , in the (1) Marginal efficiency of capital (2) Marginal propensity to save (3) Marginal propensity to consumption (4) Marginal efficiency to investment

Description : According to Keynes, business cycles are due to variation in the rate of investment caused by fluctuations , in the (1) Marginal efficiency of capital (2) Marginal propensity to save (3) Marginal propensity to consumption (4) Marginal efficiency to investment

Last Answer : Marginal efficiency of capital

A profit maximizing firm will invest up to the level of investment where (a) The cost of borrowing equals marginal efficiency of capital (b) The cost of borrowing is greater than marginal efficiency of capital © The cost of borrowing is less than marginal efficiency of capital (d) The cost of borrowing is equal to marginal propensity to consume.

Description : A profit maximizing firm will invest up to the level of investment where (a) The cost of borrowing equals marginal efficiency of capital (b) The cost of borrowing is greater than marginal ... marginal efficiency of capital (d) The cost of borrowing is equal to marginal propensity to consume.

Last Answer : (a) The cost of borrowing equals marginal efficiency of capital

Consumption demand does not depend upon the level of (a) Income ; (b) Propensity to consume ; (c) Consumer spending ; (d) Marginal efficiency of investment.

Description : Consumption demand does not depend upon the level of (a) Income ; (b) Propensity to consume ; (c) Consumer spending ; (d) Marginal efficiency of investment.

Last Answer : (d) Marginal efficiency of investment.  

What is "mps"• or the 'marginal propensity to save'? a) the proportion of total additional planned savings to total additional income b) the proportion of total additional income to total additional planned savings c) the fraction of total additional income that is used for consumption d) none of the above

Description : What is "mps" or the 'marginal propensity to save'? a) the proportion of total additional planned savings to total additional income b) the proportion of total additional income to total additional ... c) the fraction of total additional income that is used for consumption d) none of the above

Last Answer : a) the proportion of total additional planned savings to total additional incom

.An increases in investment is most likely to be caused by (a) Lower interest rates (b) Expectations of lower national incomes © A decrease in the marginal propensity to consume (d) An increase in withdrawals.

Description : .An increases in investment is most likely to be caused by (a) Lower interest rates (b) Expectations of lower national incomes © A decrease in the marginal propensity to consume (d) An increase in withdrawals.

Last Answer : (a) Lower interest rates

An increase in investment is caused by (a) Lower interest rates (b) Expectations of lower national income © A decrease in the marginal propensity to consume (d) An increase in withdrawals

Description : An increase in investment is caused by (a) Lower interest rates (b) Expectations of lower national income © A decrease in the marginal propensity to consume (d) An increase in withdrawals

Last Answer : (a) Lower interest rates

Marginal Propensity to Consume is (a) Increase in consumption due to one unit increase in income. (b) Total consumption divided by total income. © Both (a) and (b). (d) Neither (a) nor (b).

Description : Marginal Propensity to Consume is (a) Increase in consumption due to one unit increase in income. (b) Total consumption divided by total income. © Both (a) and (b). (d) Neither (a) nor (b).

Last Answer : (a) Increase in consumption due to one unit increase in income.

The slope of the consumption curve connotes (a) Average propensity to save ; (b) Marginal Propensity to consume ; (c) Marginal propensity to save ; (d) Level of consumption in the economy.

Description : The slope of the consumption curve connotes (a) Average propensity to save ; (b) Marginal Propensity to consume ; (c) Marginal propensity to save ; (d) Level of consumption in the economy. 

Last Answer : (b) Marginal Propensity to consume ;

What is "mpc"• or the 'marginal propensity to consume'? a) the proportion of total additional planned savings to total additional income b) the proportion of total additional income to total additional planned savings c) the fraction of total additional income that is used for consumption d) none of the above

Description : What is "mpc" or the 'marginal propensity to consume'? a) the proportion of total additional planned savings to total additional income b) the proportion of total additional income to total additional ... c) the fraction of total additional income that is used for consumption d) none of the above

Last Answer : : c) the fraction of total additional income that is used for consumption

Which of the following are not characteristics of Keynesian consumption function? (a) The main influence on consumption in the short run is current disposable income (b) The marginal propensity to consume is less than one © The average propensity to consume decreases as income increases (d) The average propensity to consume increases as income increases

Description : Which of the following are not characteristics of Keynesian consumption function? (a) The main influence on consumption in the short run is current disposable income (b) The marginal ... consume decreases as income increases (d) The average propensity to consume increases as income increases

Last Answer : d) The average propensity to consume increases as income increases

The marginal propensity to consume is equal to (a) Total spending/Total consumption (b) Total consumption/ Total income. © Change in consumption/ Change in income (d) Change in consumption/ Change in savings.

Description : The marginal propensity to consume is equal to (a) Total spending/Total consumption (b) Total consumption/ Total income. © Change in consumption/ Change in income (d) Change in consumption/ Change in savings.

Last Answer : © Change in consumption/ Change in income

An increase in marginal propensity to consume will (a) Lead to the consumption function becoming steeper. (b) Shift the consumption function upwards. © Shift the consumption function downwards. (d) Shift the savings function upwards.

Description : An increase in marginal propensity to consume will (a) Lead to the consumption function becoming steeper. (b) Shift the consumption function upwards. © Shift the consumption function downwards. (d) Shift the savings function upwards.

Last Answer : d) Lead to the consumption function becoming steeper.

'Marginal efficiency of capital' is - (1) expected rate of return on new investment (2) expected rate of return of existing investment (3) difference between rate of profit and rate of interest (4) value of output per unit of capital invested

Description : 'Marginal efficiency of capital' is - (1) expected rate of return on new investment (2) expected rate of return of existing investment (3) difference between rate of profit and rate of interest (4) value of output per unit of capital invested

Last Answer : (1) expected rate of return on new investment Explanation: The volume of investment depend upon the following two factors: (1) rate of interest: and (2) marginal efficiency of capital. Before ... partly on expectations of future yields and partly on the actual price of the capital good concerned.

‘Marginal efficiency of capital’ is (1) expected rate of return on new investment (2) expected rate of return of existing investment (3) difference between rate of profit and rate of interest (4) value of output per unit of capital invested

Description : ‘Marginal efficiency of capital’ is (1) expected rate of return on new investment (2) expected rate of return of existing investment (3) difference between rate of profit and rate of interest (4) value of output per unit of capital invested

Last Answer :  expected rate of return on new investment

The cost of borrowing is equal to marginal propensity to consume. 21. Investment is (a) An injection that increases aggregate demand (b) An withdrawal that increases aggregate demand © An injection that decreases aggregate demand (d) An withdrawal that decreases aggregate demand

Description : The cost of borrowing is equal to marginal propensity to consume. 21. Investment is (a) An injection that increases aggregate demand (b) An withdrawal that increases aggregate demand © An injection that decreases aggregate demand (d) An withdrawal that decreases aggregate demand

Last Answer : a) An injection that increases aggregate demand

Which of the following concepts are most closely associated with J.M. Keynes? (1) Control of money supply (2) Marginal utility theory (3) Indifference curve analysis (4) Marginal efficiency of captial

Description : Which of the following concepts are most closely associated with J.M. Keynes? (1) Control of money supply (2) Marginal utility theory (3) Indifference curve analysis (4) Marginal efficiency of captial

Last Answer : (4) Marginal efficiency of captial Explanation: The marginal efficiency of capital (MEC) is that rate of discount which would equate the price of a fixed capital asset with its present discounted ... given by the returns expected from the capital asset during its life Just equal its supply price

Which of the following concepts are most closely associated with J.M. Keynes ? (1) Control of money supply (2) Marginal utility theory (3) Indifference curve analysis (4) Marginal efficiency of captial

Description : Which of the following concepts are most closely associated with J.M. Keynes ? (1) Control of money supply (2) Marginal utility theory (3) Indifference curve analysis (4) Marginal efficiency of captial

Last Answer : Marginal efficiency of captial

Keynesian theory of investment is known as ----- (a) Marginal Efficiency of Capital Theory. (b) Marginal Efficiency of Investment Theory. © Optimum Stock of Capital Theory. (d) Actual Stock of Capital Theory.

Description : Keynesian theory of investment is known as ----- (a) Marginal Efficiency of Capital Theory. (b) Marginal Efficiency of Investment Theory. © Optimum Stock of Capital Theory. (d) Actual Stock of Capital Theory.

Last Answer : (b) Marginal Efficiency of Investment Theory.

Law of diminishlng marginal rate of substitution is associated withA.MarshallB.HicksC.SlutskyD.Keynes

Description : Law of diminishlng marginal rate of substitution is associated with A.Marshall B.Hicks C.Slutsky D.Keynes

Last Answer : B.Hicks

By definition, the marginal propensity to consume (a) Equals ΔC/ΔYd ; (b) Is the behavioral coefficient c in the equation C = a + cYd; (c) Is the slope of the consumption function ; (d) All the above

Description : By definition, the marginal propensity to consume (a) Equals ΔC/ΔYd ; (b) Is the behavioral coefficient c in the equation C = a + cYd; (c) Is the slope of the consumption function ; (d) All the above 

Last Answer : (d) All the above

Who defined investment as "the construction of a new capital asset like machinery or factory building"? (1) Hansen (2) J.M. Keynes (3) Harrod (4) J.R. Hicks

Description : Who defined investment as "the construction of a new capital asset like machinery or factory building"? (1) Hansen (2) J.M. Keynes (3) Harrod (4) J.R. Hicks

Last Answer : (2) J.M. Keynes Explanation: Investment expenditure refers to the creation of new assets i.e. an addition to the stock of existing capital assets. According to Keynes investment demand depends upon ... the rate of interest (IR). Investment demand decreases with the increase in the rate of interest.

Who defined investment as “the construction of a new capital asset like machinery or factory building” ? (1) Hansen (2) J.M. Keynes (3) Harrod (4) J.R. Hicks

Description : Who defined investment as “the construction of a new capital asset like machinery or factory building” ? (1) Hansen (2) J.M. Keynes (3) Harrod (4) J.R. Hicks

Last Answer : J.M. Keynes

The marginal propensity to consume lies between (1) 0 to 1 (2) 0 to ¥ (3) 1 to ¥ (4) ¥ to ¥

Description : The marginal propensity to consume lies between (1) 0 to 1 (2) 0 to ¥ (3) 1 to ¥ (4) ¥ to ¥

Last Answer : 0 to 1

As the number of investments made by a firm increases, its internal rate of return - (1) declines due to diminishing marginal productivity. (2) declines because the market rate of interest will fall, ceteris paribus. (3) increases to compensate the firm for the current consumption foregone. (4) increases because the level of savings will fall.

Description : As the number of investments made by a firm increases, its internal rate of return - (1) declines due to diminishing marginal productivity. (2) declines because the market rate of interest will ... the firm for the current consumption foregone. (4) increases because the level of savings will fall.

Last Answer : (3) increases to compensate the firm for the current consumption foregone. Explanation: Internal rates of return are commonly used to evaluate the desirability of investments or projects. The higher a ... of return is greater than an established minimum acceptable rate of return or cost of capital.

As the number of investments made by a firm increases, its internal rate of return (1) declines due to diminishing marginal productivity. (2) declines because the market rate of interest will fall, ceteris paribus. (3) increases to compensate the firm for the current consumption foregone. (4) increases because the level of savings will fall.

Description : As the number of investments made by a firm increases, its internal rate of return (1) declines due to diminishing marginal productivity. (2) declines because the market rate of interest will fall ... firm for the current consumption foregone. (4) increases because the level of savings will fall.

Last Answer :  increases to compensate the firm for the current consumption foregone.

Average propensity to consume is defined as - (1) Aggregate consumption +Total population (2) Aggregate income ÷ Aggregate consumption (3) Change in consumption ÷ Change in income (4) Aggregate consumption +Aggregate income

Description : Average propensity to consume is defined as - (1) Aggregate consumption +Total population (2) Aggregate income ÷ Aggregate consumption (3) Change in consumption ÷ Change in income (4) Aggregate consumption +Aggregate income

Last Answer : (4) Aggregate consumption +Aggregate income Explanation: In economics, the average propensity to consume (APC) is defined as the ratio of aggregate or total consumption to aggregate income in a given ... propensity to consume, for any income level, may be found by dividing consumption by income.

Main purpose of buffer stock is : (a) to save food grains from pest attack (b) to stop price fluctuations (c) to meet the crisis of low production (d) both (b) and (c)

Description : Main purpose of buffer stock is : (a) to save food grains from pest attack (b) to stop price fluctuations (c) to meet the crisis of low production (d) both (b) and (c)

Last Answer : (d) both (b) and (c)

What is the term in economics for the consumption of fixed capital? a) Investment b) Value added c) Production flow d) Depreciation

Description : What is the term in economics for the consumption of fixed capital? a) Investment b) Value added c) Production flow d) Depreciation

Last Answer : d) Depreciation

Maintain 850 OC for 1 hour (soaking time).  Cool the material to 60 OC in 4 hours. a) Calculate the efficiency of the furnace, if the specific heat of steel is 0.12 kcal/kgOC and fuel oil consumption per batch is 1400 litres.  GCV of fuel oil - 10200 kcal/kg,  Cost of fuel oil - Rs. 46,000/kL,  Sp. gr. of fuel oil - 0.92. b) Due to high cost of oil, the plant management decides to convert to a lower operating cost LPG fired furnace lined on the inside with ceramic fibre insulation and with an operating efficiency of 80%, for same requirement. The investment towards installation of the new furnace is Rs. 50 lakhs. Calculate the Return on Investment, if the plant operates two batches per day and 250 days in a year.  Cost of LPG - Rs. 75/kg,  GCV of LPG - 12500 kcal/kg.

Description : In a heat treatment shop, steel components are heat-treated in batches of 80 Tons. The  heat treatment cycle is as follows;  Increase temperature from 30 OC to 850 OC in 3 hours.  ... efficiency of 80%, for same requirement. The investment towards installation of  the new furnace is Rs. 50

Last Answer : Quantity of steel treated per batch - 80 Tons a. Efficiency of Furnace: Useful heat supplied to steel - 80000 x 0.12 x (850 - 30)   = 7872000 kcal/batch .1 mark Total heat ... = Rs. 64400/batch Efficiency of new LPG furnace - 80% Heat supplied in new LPG furnace - 7872000/0.8

The demand for money, according to Keynes, is for - (1) speculative motive (2) transaction motive (3) precautionary motive (4) All the above motives

Description : The demand for money, according to Keynes, is for - (1) speculative motive (2) transaction motive (3) precautionary motive (4) All the above motives

Last Answer : (3) precautionary motive Explanation: According to Keynes, money is demanded because of three motives -transaction, precautionary and speculative. The first two motives provide yield of convenience ... third motive provides money yield. Keynes has termed demand for money as liquidity preference.

"Interest is a reward for parting with liquidity" is according to - (1) Keynes (2) Marshall (3) Haberler (4) Ohlin

Description : "Interest is a reward for parting with liquidity" is according to - (1) Keynes (2) Marshall (3) Haberler (4) Ohlin

Last Answer : (1) Keynes Explanation: In macroeconomic theory, liquidity preference refers to the demand for money, considered as liquidity. The concept was first developed by John Maynard Keynes in his book The ... a reward for saving, interest in the Keynesian analysis is a reward for parting with liquidity.

7. According to Keynes, when the Great Depression started, the government should have: a. done nothing b. decreased the money supply c. had a large increase in government spending d. enacted high tariffs, such as the Smoot-Hawley Tariff

Description : 7. According to Keynes, when the Great Depression started, the government should have: a. done nothing b. decreased the money supply c. had a large increase in government spending d. enacted high tariffs, such as the Smoot-Hawley Tariff

Last Answer : c. budget surplus of $1000

The demand for money, according to Keynes, is for (1) speculative motive (2) transaction motive (3) precautionary motive (4) All the above motives

Description : The demand for money, according to Keynes, is for (1) speculative motive (2) transaction motive (3) precautionary motive (4) All the above motives

Last Answer : precautionary motive

According to principle of diminishing marginal rate of substitution a. One commodity must be decreased while other is increased b. Commodity which is increased has higher marginal significance c. Commodity which is decreased has higher marginal significance. Of these statemenls: A.Only a is correct B.Both a and b are correct C.Both a and c are correct D.All are correct

Description : According to principle of diminishing marginal rate of substitution a. One commodity must be decreased while other is increased b. Commodity which is increased has higher marginal significance c. Commodity which is decreased ... .Both a and b are correct C.Both a and c are correct D.All are correct

Last Answer : C.Both a and c are correct

The value of investment multiplier relates to - (1) change in income due to change in autonomous investment. (2) change in autonomous investment due to change in income. (3) change in income due to change in consumption. (4) change in the income due to change in induced investment.

Description : The value of investment multiplier relates to - (1) change in income due to change in autonomous investment. (2) change in autonomous investment due to change in income. (3) change in income due to change in consumption. (4) change in the income due to change in induced investment.

Last Answer : (2) change in autonomous investment due to change in income. Explanation: The term investment multiplier refers to the concept that any increase in public or private investment spending has a ... . The investment multiplier tries to determine the financial impact for a public or private project.

The value of investment multiplier relates to (1) change in income due to change in autonomous investment. (2) change in autonomous investment due to change in income. (3) change in income due to change in consumption. (4) change in the income due to change in induced investment.

Description : The value of investment multiplier relates to (1) change in income due to change in autonomous investment. (2) change in autonomous investment due to change in income. (3) change in income due to change in consumption. (4) change in the income due to change in induced investment.

Last Answer : change in autonomous investment due to change in income.

Law of diminishing marginal utility is based on the assumption that a. Tastes change over time b. Consumption is continuous c. Different units of goods consumed are homogeneous Of these statements: A.Only a is true B.a and c are true C.b and c are true D.All are true

Description : Law of diminishing marginal utility is based on the assumption that a. Tastes change over time b. Consumption is continuous c. Different units of goods consumed are homogeneous Of these statements: A.Only a is true B.a and c are true C.b and c are true D.All are true

Last Answer : D.All are true

Pick up the correct statement from the following: (A) The refractive index of a medium varies according to the wavelength of the radiation, (B) The variation of the refractive index with wave length, is called dispersion, (C) The splitting of colours of white light by passing through a prism is caused due to dispersion (D) All of these

Description : Pick up the correct statement from the following: (A) The refractive index of a medium varies according to the wavelength of the radiation, (B) The variation of the refractive index with wave length, ... of white light by passing through a prism is caused due to dispersion (D) All of these

Last Answer : Answer: Option D

6. Assume that Potential Real GDP equals $10,000. National Income is therefore $10,000. Of this, consumers will pay $2,000 in taxes, save $1,000, and spend $7,000 on consumer goods. Business Investment spending is $2000. In order to avoid recessions and inflation (to have equilibrium), the government should have a: a. balanced budget b. budget deficit of $1000 c. budget surplus of $1000 d. budget deficit of $2000 C C A A C

Description : 6. Assume that Potential Real GDP equals $10,000. National Income is therefore $10,000. Of this, consumers will pay $2,000 in taxes, save $1,000, and spend $7,000 on consumer goods. Business Investment ... . budget deficit of $1000 c. budget surplus of $1000 d. budget deficit of $2000 C C A A C

Last Answer : c. budget surplus of $1000

“Crowding out” means that a. a government budget deficit lowers interest rates and causes investment spending to rise b. an increase in marginal tax rates lowers production c. a government budget deficit raises interest rates and causes investment spending to fall d. a government budget deficit raises American exports and lowers American imports

Description : Crowding out means that a. a government budget deficit lowers interest rates and causes investment spending to rise b. an increase in marginal tax rates lowers production c. a government ... spending to fall d. a government budget deficit raises American exports and lowers American imports

Last Answer : c. a government budget deficit raises interest rates and causes investment spending to fall

10. “Crowding out” means that a. a government budget deficit lowers interest rates and causes investment spending to rise b. an increase in marginal tax rates lowers production c. a government budget deficit raises interest rates and causes investment spending to fall d. a government budget deficit raises American exports and lowers American imports

Description : 10. Crowding out means that a. a government budget deficit lowers interest rates and causes investment spending to rise b. an increase in marginal tax rates lowers production c. a ... investment spending to fall d. a government budget deficit raises American exports and lowers American imports

Last Answer : c. a government budget deficit raises interest rates and causes investment spending to fall

According to Acceleration principle investment depends on change in the level of------ (a) rate of interest. (b) level of income. © price (d) saving.

Description : According to Acceleration principle investment depends on change in the level of------ (a) rate of interest. (b) level of income. © price (d) saving.

Last Answer : (b) level of income.

The fundamental difference between cycles and seasonality is the (a) duration of the repeating patterns ; (b) magnitude of the variation (c) ability to attribute the pattern to a cause ; (d) all of the above

Description : The fundamental difference between cycles and seasonality is the (a) duration of the repeating patterns ; (b) magnitude of the variation (c) ability to attribute the pattern to a cause ; (d) all of the above 

Last Answer : (a) duration of the repeating patterns ;

In a business, raw materials, components, work in progress and finished goods are jointly regarded as - (1) capital stock (2) inventory (3) investment (4) net worth

Description : In a business, raw materials, components, work in progress and finished goods are jointly regarded as - (1) capital stock (2) inventory (3) investment (4) net worth

Last Answer : (2) inventory Explanation: Inventory refers to raw materials, work-in-process goods and completely finished goods that are considered to be the portion of a business's assets that are ... of the primary sources of revenue generation and subsequent earnings for the company's shareholders/owners.

In a business, raw materials, components, work in progress and finished goods are jointly regarded as (1) capital stock (2)inventory (3) investment (4)net worth

Description : In a business, raw materials, components, work in progress and finished goods are jointly regarded as (1) capital stock (2)inventory (3) investment (4)net worth

Last Answer : inventory

Average Propensity to Save?

Description : Average Propensity to Save?

Last Answer : In Economics there is a term, Average Propensity to Save (APS). This is sometimes referred to as the savings ratio. It is roughly defined as the portion of income retained after taxes and ... to increase your Average Propensity to Save †it could mean the difference between panic and peace.

Which of the following relations always holds true? (1) Income = Consumption + Investment (2) Income = Consumption + Saving (3) Saving = Investment (4) Income = Consumption + Saving + Investment

Description : Which of the following relations always holds true? (1) Income = Consumption + Investment (2) Income = Consumption + Saving (3) Saving = Investment (4) Income = Consumption + Saving + Investment

Last Answer : (2) Income = Consumption + Saving Explanation: Consumers do one of two things with their disposable income: They save it or they spend it. So Income = Consumption + Saving.

Consumptions function refers to - (1) relationship between income and employment (2) relationship between savings and investment (3) relationship between input and output (4) relationship between income and consumption

Description : Consumptions function refers to - (1) relationship between income and employment (2) relationship between savings and investment (3) relationship between input and output (4) relationship between income and consumption

Last Answer : (4) relationship between income and consumption Explanation: The Consumption function is a single mathematical function used to express consumer spending. It was developed by John Maynard Keynes and ... by current income and induced consumption that is influenced by the economy's income level.

Goods which are meant either for consumption or for investment are called - (1) Final goods (2) Giffen goods (3) Inferior goods (4) Intermediate goods

Description : Goods which are meant either for consumption or for investment are called - (1) Final goods (2) Giffen goods (3) Inferior goods (4) Intermediate goods

Last Answer : (1) Final goods Explanation: All goods which are meant either (i) for consumption by consumers or (ii) for investment by firms are called final goods. They are finished goods, meant for final ... stages of production. Cars, television sets, cloth, food, machinery, equipments etc. are final goods.

Investment multiplier shows the effect of investment on - (1) Employment (2) Savings (3) Income (4) Consumption

Description : Investment multiplier shows the effect of investment on - (1) Employment (2) Savings (3) Income (4) Consumption

Last Answer : (3) Income Explanation: Investment multiplier is simply the multiplier effect of an injection of investment into an economy. The multiplier effect refers to the idea that an initial spending rise can lead to even greater increase in national income